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Before the Democrats' affirmative action lending policies became an embarrassment, the Los Angeles Times reported that, starting in 1992, a majority-Democratic Congress "mandated that Fannie and Freddie increase their purchases of mortgages for low-income and medium-income borrowers.

Operating under that requirement, Fannie Mae, in particular, has been aggressive and creative in stimulating minority gains."

Under Clinton, the entire federal government put massive pressure on banks to grant more mortgages to the poor and minorities. Clinton's secretary of Housing and Urban Development, Andrew Cuomo, investigated Fannie Mae for racial discrimination and proposed that 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low- to moderate-income borrowers by the year 2001.

Instead of looking at "outdated criteria," such as the mortgage applicant's credit history and ability to make a down payment, banks were encouraged to consider nontraditional measures of credit-worthiness.

Threatening lawsuits, Clinton's Federal Reserve demanded that banks treat welfare payments and unemployment benefits as valid income sources to qualify for a mortgage. That isn't a joke -- it's a fact.

When Democrats controlled both the executive and legislative branches, political correctness was given a veto over sound business practices.

In 1999, liberals were bragging about extending affirmative action to the financial sector. Los Angeles Times reporter Ron Brownstein hailed the Clinton administration's affirmative action lending policies as one of the "hidden success stories" of the Clinton administration, saying that "black and Latino homeownership has surged to the highest level ever recorded."

Meanwhile, economists were screaming from the rooftops that the Democrats were forcing mortgage lenders to issue loans that would fail the moment the housing market slowed and deadbeat borrowers couldn't get out of their loans by selling their houses.

A decade later, the housing bubble burst and, as predicted, food-stamp-backed mortgages collapsed. Democrats set an affirmative action time-bomb and now it's gone off.

In Bush's first year in office, the White House chief economist, N. Gregory Mankiw, warned that the government's "implicit subsidy" of Fannie Mae and Freddie Mac, combined with loans to unqualified borrowers, was creating a huge risk for the entire financial system.

Rep. Barney Frank denounced Mankiw, saying he had no "concern about housing." How dare you oppose suicidal loans to people who can't repay them!

The New York Times reported that Fannie Mae and Freddie Mac were "under heavy assault by the Republicans," but these entities still had "important political allies" in the Democrats.

Now, at a cost of hundreds of billions of dollars, middle-class taxpayers are going to be forced to bail out the Democrats' two most important constituent groups: rich Wall Street bankers and welfare recipients.

Political correctness had already ruined education, sports, science and entertainment. But it took a Democratic president with a Democratic congress for political correctness to wreck the financial industry.

-Courtesy RIS Media-October 2008

Sandi Bates

Old Mill Realty

www.sandibates.com

801-367-7777

Abusive and predatory lending practices are a serious problem for our nation's communities. Because of abuses in the sub prime market, families are losing their homes and savings, foreclosure rates are higher, and some neighborhoods face increased vacancy rates. Empty neighborhoods, or those where the majority of houses are for sale, can be perceived as blighted. This leads to declining prices and inevitably devastates the strength and stability of those communities and the families who live there.

How Did This Happen?

During the real estate boom, many lenders originated risky mortgages with floating interest rates and weak underwriting standards. While some in the media may have over-dramatized the situation, a number of sub prime lenders that made problematic loans have gone out of business, and the delinquency rate for sub prime loans at the end of 2006 was more than 13 percent--4.5 percent are in foreclosure.

Sub prime Lending Does Have a Legitimate Role for Many Borrowers While abusive lending does occur primarily in sub prime markets, not all sub prime loans are abusive or problematic. In fact, responsible sub prime lenders have played an important role in helping millions of consumers achieve homeownership.

Education is Key

The National Association of Realtors believe that financial education is an important defense against abusive lending practices and have issued a series of consumer education brochures. They emphasize the importance of understanding the different types of available mortgages, explain how to avoid pitfalls, and entrapments of predatory loans, and suggest what homeowners should do if they are concerned about their mortgage or foreclosure.

If you feel like you need immediate advice; call toll free 888-995-HOPE, or visit www.995hope.org.

Sandi Bates

Old Mill Realty

www.sandibates.com

801-367-7777

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